The New IFRS 16 Leases – accounting aspects and impact on the lessee’s financial position
Abstract
Abstract: Leasing is an important instrument for financing the business of the enterprises from different sectors and areas of the economy of the country – production, retail, wholesale, transport and infrastructure, healthcare, telecommunications, etc. Leasing allows enterprises and organizations to use fixed (non-current) tangible assets for their operations, without incurring large cash outflows.
In accordance with the currently applicable legislation, lessees account for their leased assets under operating leases off-balance, and the assets acquired under finance lease – in their balance sheet.
With IFRS 16 “Leases” that will become effective on 1 January 2019, significant changes in the accounting of the operating leases of the lessees will occur. The assets acquired under operating leases valid for more than 12 months should be accounted for as assets and should be stated in the asset section of the lessee’s balance sheet. Exceptions of these rules comprise leases for low value assets as well as short-term leases valid for less than 12 months, which will be accounted for off-balance.
These amendments in the legal regulations (in this particular case, IFRS 16 Leases)
setting out leasing and its statement in the lessee’s financial statements make the issue of the accounting of leased assets of these enterprises acquired by virtue of operating leases, topical.
This publication studies the provisions of IFRS 16 Leases and the accounting of operating leases, and its subject covers the impact of the new accounting methodology on the key business indicators defining the lessees’ business.
The aim of this publication is to analyze and assess the values of the key business indicators of the lessees under operating leases when applying IFRS 16 Leases.
References
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3. IFRS 16 issued by IASB on 13.01.2016, Official Journal, no. L 291 of 9.11.2017.
4. Natchkova, M., Specificities of Business and Accounting of Insurers in Insolvency and Liquidation, S., University Publishing House Stopanstvo, 2010, p.42
5. Chukov, K., R. Ivanova, Financial and Business Analysis, S. Publishing House UNS, 2017

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